The decision opens the way for Moors murderer Myra Hindley to argue that one of his predecessors, Michael Howard, had no power to rule that she be detained for the rest of her life.

Mr Blunkett's reaction was to play down the ruling while promising that legislation would ensure there was "adequate punishment" for the guilty.

The Human Rights Court said the Home Secretary's role had "become increasingly difficult to reconcile with the notion of separation of powers between the executive and the judiciary".

Overturning one of their earlier rulings, the Strasbourg judges declared that adult murderers in England and Wales should have their minimum punishment period set in the same way as juvenile murderers and prisoners serving life imprisonment for other crimes.

In all such cases, the tariff is fixed by the court. On expiry, a judicial body decides whether the prisoner may be released safely.

The judges were ruling in favour of Dennis Stafford, 69, who served 12 years of a life sentence for a gangland killing in 1967. They held that successive Home Secretaries had no power to order him back to prison after he had completed his tariff.

Mr Blunkett, while "disappointed", maintained the ruling did not "directly" affect the status of adult murderers whose tariff had not yet expired.

Lawyers said his argument was "completely unsustainable" and Home Office officials privately accepted that the Government was likely to lose the forthcoming case of Anderson and Taylor, to be heard by the House of Lords.

That case was brought by two murderers who were given higher tariffs by the Home Secretary than by the judiciary. Last year, the Court of Appeal, following the Strasbourg ruling that was overturned yesterday, accepted that the Home Secretary could increase their tariffs.

This still represented the law, the Home Office said yesterday. However, a decision by the law lords would "open the door" to further challenges.

Mr Blunkett maintained that the Stafford case would not directly affect the 22 prisoners who have been given "whole life" tariffs by successive Home Secretaries.

But Hindley, who has now served 37 years, was originally given a 25-year tariff by Lord Lane, the then Lord Chief Justice.

She could now argue that Mr Howard had no power to decide in 1997 that she should never be released. If that argument is accepted, it would be for the Parole Board to decide whether it was safe for her to be let out.

Home Office officials acknowledged that Hindley's position would be affected if Mr Blunkett lost the Anderson and Taylor case.

The Home Secretary said he would use legislation if necessary to "provide adequate punishment for the guilty - including life meaning life".

One option would be to provide that prisoners serving whole-life tariffs should have their cases reviewed by the Lord Chief Justice.

If Lord Woolf concluded that Hindley deserved to be kept in prison for life, it would be difficult for her to challenge that decision in the light of yesterday's ruling.